Financial Reports & Markets
China will lead industry growth for 2012 predicts Deloitte
April 9, 2012 By Pulp & Paper Canada
According to the 2012 Global forest, paper, and packaging sector outlook from Deloitte Touche Tohmatsu Limited’s (DTTL) Global Manufacturing Industry group, the forecast for this sector is closely tied to economic and operational dynamics…
According to the 2012 Global forest, paper, and packaging sector outlook from Deloitte Touche Tohmatsu Limited’s (DTTL) Global Manufacturing Industry group, the forecast for this sector is closely tied to economic and operational dynamics at the regional level, and how they impact the global supply chain of the industry.
According to the report, China is expected to lead the sector in growth for 2012 due to increasing demand in the Asia Pacific region. However, Chinese companies are confronted with profitability challenges because of raw material cost and producer fragmentation.
Modest growth is anticipated in North America overall, but several subsectors will still face difficulties ahead.
“A handful of well-managed paper and packaging producers will continue to focus on operational efficiencies and cost containment strategies while building strong cash reserves on their balance sheets,” said John Dixon, global forest, paper, and packaging sector leader, DTTL. “These companies are in a good position to make bold moves into adjacent products, enter new emerging markets, or further their market share through acquisitions. They are also able to better address the growing challenge of securing limited natural resources and manage the uncertainties of government regulation. The widening gap between the haves and have-nots could have a material impact on the global dynamics of the industry.”
Europe is facing a potential economic recession due to declining demand and overcapacity for paper products. Meanwhile, growth in South America is slowing, with only an incremental increase in pulp and paper demand expected for 2012.
“Pulp producers are nearing the bottom of the roller coaster ride that they have been on for the past year and a half. Pulp prices have tumbled from their recent highs thanks to an 18 percent increase in inventories compared to last year when there was a scarcity of pulp throughout the world,” said Dixon. “At the end of the first quarter in 2012, prices are beginning to recover, led by South American producers. The global forest, paper, and packaging companies that have made the necessary adjustments to strengthen their position through liquidity, operational efficiencies, and opportunistic growth will likely have a strong performance year in 2012 and will continue to influence the on-going evolution of the industry.”
To access the 2012 Global forest, paper, and packaging sector outlook, please visit www.deloitte.com/manufacturing.
Print this page